According to police, during her years in captivity her kidnapper had fathered two children with her and kept all three living in tents and sheds behind his house.
"It's a pretty spectacular story just to find someone like that. Someone we assumed was dead," said Bill Clark, the chief assistant district attorney for El Dorado County, east of the state capital of Sacramento.
Garrido, a registered sex offender in California who had previously been jailed for rape and kidnapping, and his wife Nancy, were both arrested on Wednesday, police said.
Detectives said suspicions were first raised after Garrido tried to enter a nearby university campus to pass out leaflets with his two daughters.
His interaction with the two young girls - aged 11 and 15 - raised suspicion and police looked into his background.
The next day, during a visit to his parole officer, Garrido brought his wife, the two girls and another woman named Allissa - who later proved to be Dugard.
Fred Kollar, the El Dorado County Undersheriff, told the Reuters news agency that Dugard was healthy, but said that "living in a backyard the last 18 years must take its toll.
"None of the children had ever been to school, none had been to a doctor, they were kept in complete isolation in this compound, if you will, at the house."
Dugard was walking to a bus stop near her home when she was kidnapped.
Carl Probyn, the girl's stepfather, told local television that "we both cried for about 10 minutes" after he and her mother were informed by the authorities that she had been found alive.
"Just total shock you know, after 18 years. When my wife called me and basically said 'are you sitting down?' I said 'yeah' and she goes 'they found Jaycee'. And she paused for 10 seconds, and she goes 'she's alive'."
Amid the continuing investigation, Dugard has been reunited with her mother at a secret location near San Francisco.